Imagine that you have a small business and you need to find new customers. I think everyone needs it. Today more than ever, the phrase “Think globally, act locally” is more present in our lives than ever. I can imagine that for most persons the think part is easier than the act part.
But as we think globally, we look at the world that is full of opportunities and start to plan where and how I’m going to expand my business somewhere else. There are 7.3 billion persons in the world; for sure you have a product that you can sell to someone out there.
In Africa you find the perfect combination that doesn’t exist in any other area on the globe:
CONSUMERS: According to the Population Reference Bureau, “The world population in 2050 is projected to reach 9.8 billion. Africa’s population will more than double to 2.6 billion by 2050 and account for 57 percent of the global population increase by that date.” This is due to a mix of increase of life expectancy at birth, decrease of mortality rate, better health services and increase of family income. The main grow will happen in Sub-Sahara Africa that today has 1 Million habitants. You will always have more customers and a rapid increasing market to sell to in the future.
INVESTMENT: Foreign direct investment has increase 10% in 2017, reaching $65 Billions, mainly to East African countries. (UNCTAD World Investment Report 2017). The world Bank has invested around $1.7 Billion in 20 new projects from agriculture, energy, education, technology, etc. (www.worldbank.org). New investment and projects are coming in each year full of opportunities to participate.
IMPORTS: If we talk about Sub-Sahara Africa, imports double in the past 10 years reaching $602 Billion. Just food counts for $35Billion and is predicted to reach $110 Billion in 2030. So what we have here is the perfect market where people import everything. African countries are starting to enter the industrialization phase but this will take some time to be implemented. Restrictions on imports are increasing in some countries, like Algeria, Ethiopia and others. But this has the other side of the coin where traditional commercial partners like Europe are restricting FDI to these countries to pressure free trade agreements. (www.worldbank.org).
RESOURCES: Africa has the largest concentration of mines in the world, gold, diamonds, Aluminium Ore. Rich in hydrocarbons and gas, with large reserves all over the continent. In traditional segments we have Cocoa, coffee, grains, textiles, wood, etc. Africa is very rich in resources and exports are the main source of income for development. For those who think Africa is poor, that would be an incorrect assumption.
1. https://www.weforum.org/agenda/2016/05/which-are-africas-biggest-exports/
TECNOLOGY: This reminds me the tale of the shoe manufacture that send 2 salesman to a country in Africa. When they come back one said “we don’t have any chance there, everyone is shoeless, and nobody buys shoes”. The other salesman said “That is the perfect market for us, nobody has shoes we will sell millions!”. Technology is increasing exponential in Africa, cell phones selling rate is the highest in the world. This is no longer a commodity, is a way of living. It’s a door to exterior world that they don’t have physical access. This is the perfect market to sell technology and related products.
1. https://www.bbc.co.uk/news/business-24524260
PURCHASING POWER: The increase of middle class population is astonishing in Africa. FDI is bringing more jobs, better paid and more than that, an increasing level of education that for sure will bring new entrepreneurs to the market. One area that is increasing dramatically is Aviation. According to IATA, Africa will grow by 5.1% in aviation. By 2035 it will see an extra 192 million passengers a year for a total market of 303 million passengers. This is an example of how the consumption of middle class is growing in the continent.
GEOGRAPHY: The real size of Africa is not what we know of it. “The distortion is the result of the Mercator map which was created in 1596 to help sailors navigate the world It gives the right shapes of countries but at the cost of distorting sizes in favour of the wealthy lands to the north. For instance, North America looks larger, or at least as big, as Africa, and Greenland also looks of comparable size. In reality, you can fit North America into Africa and still have space for India, Argentina, Tunisia and some left over. Map suggests Scandinavian countries are larger than India, whereas in reality India is three times the size. The biggest challenge for cartographers is that it is impossible to portray reality of spherical world on a flat map.”
The market is bigger than you think, much much bigger!
So if everything is perfect, we have a fast growing market with resources to buy any lack of products, why then do most companies not just go there and do business?
AVOID THE RISK: Almost every day we receive “bad” news from the media about Africa. Violence or terrorism, political conflicts, corruption, an endless list of problems. This creates a very bad image about Africa and its people. According to the institute for Economics and peace there are many countries in Africa with similar risk as Europe or USA. And even in some countries where they face problems with violence and terrorism, that happens thousands of kms from the main capitals. How many terrorism attacks happen in main capitals in Africa compare to Europe?
Regarding political conflicts and corruption, we can´t give much example in Europe, look at problems in Portugal, Italy, Spain, etc. And these political conflicts in Africa rarely turn in to direct violent conflicts, not any more.
RESPECT THE CULTURE: Culture is a very important aspect of the business and the people life in Africa. First it is a heritage that everyone respects. The diversity of religions, tribes, and languages it’s immense. And why is that important? For example, if you visit a majority muslin country you should know that Friday is a day off. You have to speak French, English, Portuguese, Spanish, depending where you want to go. Depending on your tribe, in some countries, you will trade food or tools or textiles. Knowing the traditional coffee ceremony in Ethiopia, what to lunch in Maghreb countries, special greeting like Jambo or Karibu Sana in Kenya, etc. One thing that we need to learn from Africa is to respect our roots and our elders, they are fantastic on that.
After this reading this text are you excited to visit Africa and expand your markets? There are a couple of things to do:
- Investigate your market, google it!
- Ask question to persons and entities that are already there.
- Study the culture, mores, languages, religion, etc.
- Prepare your trip well, visas, flights, hotels.
- Be Marco polo, explore, go there!
Good luck and you will be pleasantly surprised and rewarded if you insist and work hard for it.